Although the Venezuelan government announced in early 2008 that the Kimberley Process Certification Scheme (KPCS) had ratified the country as a diamond producer, the government has still failed to report any production volumes for the gem.

The lack of information comes in the face of complaints in late 2007 by two NGOs that are intimately involved with the Kimberley Process - Global Witness and Partnership Africa Canada (PAC) - that called for a tougher stance in Venezuela on the issue of illegal diamond trading.

The mining sector is now on hold, awaiting a government decision that will allow development to resume for diamonds and other minerals.

Gilberto Sánchez, the president of Venezuela's mining chamber (Camiven), spoke with BNamericas about the issue.

BNamericas: What is the situation in Venezuela regarding the KPCS?

Sánchez: Venezuela was part of the certification process but now it isn't because it withdrew. Venezuela signed the Kimberley certification agreement in 2003 and we are talking about the same administration that is still in power.

It broke the contract in 2005 and from that day on, it hasn't registered a thing and has no record of the country's diamond production, but as far as whether it's producing? Yes, it's producing.

BNamericas: In June 2007, deputy mining minister Iván Hernández announced that Venezuela would certify diamond exports in order to comply with the regulations of the Kimberley certification process. How is that coming along?

Sánchez: Nothing has happened. The government asked for an extension so it could establish a control system in order to make reports and comply with the Kimberley guidelines. The deadline [for compliance] should have kicked in two months ago and I don't even know what Kimberley's response was to the request because I believe Venezuela had already been kicked out of the organization.

That means Kimberley told the government that in view of not having reported a single diamond production figure since 2005 despite the fact that mining had continued, Venezuela was blacklisted.

That was when the government, in a move to resolve the problem politically, asked for a two-year extension in order to organize the issue.

BNamericas: Does that mean there is a black market for diamonds in Venezuela now?

Sánchez: Well, that's why Kimberley is drawing attention to the situation. The organization's plan is to blacklist Venezuelan diamonds around the world.

BNamericas: Has the measure had any effect?

Sánchez: How can you tell if we don't even know how much is produced? How can you measure whether it's had an effect? There's just no way of knowing.

Venezuelan diamonds are famous around the world. Whoever deals in stones, whether for jewelry or industrial use, knows where the stones come from.

The Kimberley process is an agreement between producers where parties are required to keep an official register of their diamond production and report it to the project and whoever isn't reporting or hasn't registered for the Kimberley process is the focus of an international boycott. Then the diamonds will undoubtedly be sold on an irregular market.

BNamericas: Might that be happening with the diamonds from Venezuela?

Sánchez: Definitely.

BNamericas: The government hasn't said anything regarding the diamond sector?

Sánchez: No, nothing. And it's well known that [people] are mining and trading outside of the country because there are no stone polishers in Venezuela. There isn't an industry that specializes in [polishing] diamonds.

BNamericas: What diamond projects are currently operating in the country?

Sánchez: Diamonds can be found in Bolívar state in the Guaniamo zone and the project held by Diamantine is still valid but no diamonds are being mined.

The Diamantine company holds a contract with [state heavy industry holding company] CVG and it installed a pilot plant three years ago. It has only performed tests up to this point and the material that's been removed has been stored in a warehouse without being processed. Their deposits are on hold until the government gives the green light to be able to start operating them.

BNamericas: The company is expecting the government to issue the mining permits that are needed to develop the sector?

Sánchez: The government has said that industrial mining can begin operating in two years - the amount of time it requested from Kimberley - under rational and integral controls but in the meantime, the country runs the risk that informal, irregular and illegal mining will get worse.

Specifically in gold and diamond mining because the other mining activities are all controlled.

BNamericas: El Toco was another company that held areas for diamond exploration. What is the scenario there?

Sánchez: Big projects like the one that was held by Canteras el Toco were shut down. That was the most promising project from a sustainable mining point of view.

El Toco disappeared when all of its concessions expired. I don't know what it might be doing. It withdrew from the chamber and if it is working here, it's working very low profile.

BNamericas: Without any areas operating and without any exploration permits, does any hope remain for Venezuelan diamonds?

Sánchez: The prospect of [mining] diamonds at an integral and industrial level is on hold. But you have to remember that in order to know the size of reserves, you have to explore and that isn't happening.

BNamericas: What is Venezuela's projection for mining output this year?

Sánchez: In terms of this year's production, we're looking at the same status quo as last year, although different stoppages at some of our mines and processing plants are already causing production estimates for general volume to fall 8-10%.

ABOUT THE ORGANIZATION:The Kimberley Process Certification Scheme was established in 2000 with the support of the UN. The goal was to create a certification system for the international trade of rough diamonds and prevent the exchange of conflict diamonds.

The Kimberley process registers 48 members representing 74 countries.